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September 4, 2013
Starting next month, one of the centerpieces of the Affordable Care Act (“Obamacare”) will become active: online health insurance exchanges where individuals, families, and small businesses can compare — and enroll in — insurance plans that go into effect on January 1 of next year. These exchanges, operating in every state, will offer side-by-side comparisons of plans by participating private insurance companies as well as tell individuals and families how much of a federal subsidy, based on their income level, they are eligible for. Although no one knows exactly how well the system will work until it goes into effect, early indicators suggest that there will be robust competition between insurance companies in most states, resulting in lower premiums for individuals and families who purchase their own insurance rather than getting it through an employer.
But some uninsured people, notably nondisabled low-income adults without dependent children, will undoubtedly face a rude surprise when they go online to check out their insurance options. This is because as the health-care law was originally conceived, exchanges were meant to be for people above the federal poverty line (currently $11,490 for a single adult), since the premiums, deductibles, and copays of the plans on offer — even after federal subsidies based on income level — would be too much for a poor person to afford. The Affordable Care Act therefore mandated that states cover individuals and families with income up to 138% of the poverty line under Medicaid, the joint state–federal public health insurance program for the poor and disabled. According to the law, the federal government will pay for 100% of the cost of this expansion for the first three years, after which it will cover 90% and states will pay for 10%.
Eligibility for insurance purchased through online exchanges was set at the poverty line and above, so that people with an income level between 100% and 138% of the poverty line could choose between Medicaid and federally subsidized private insurance. Last year, however, the US Supreme Court struck down the health-care law’s requirement that states expand Medicaid eligibility up to 138% of the poverty line, leaving that decision to each state. Currently, 24 states and the District of Columbia are set to expand Medicaid eligibility as the Affordable Care Act intended, while 22 are not expanding eligibility, and four are still debating the issue. This situation means that in states where Medicaid is not being expanded, an adult with an individual or family income just below the poverty line (but above the Medicaid eligibility level) will not be eligible for either Medicaid or federally subsidized private insurance, while someone with an income just above the poverty line will be eligible for subsidized insurance from his or her state’s online exchange.
It’s not just childless, nondisabled adults — most of whom are currently ineligible for Medicaid — who will be caught in a bind. While state Medicaid eligibility income levels vary, the median income cap for working parents is 63% of the poverty line; for jobless parents, it is 37% of the poverty line; and for the elderly and disabled, it is 79% of the poverty line. For anyone whose income places them above these ranges but below 100% of the poverty line, anything resembling affordable insurance will remain out of reach.
To make matters more complicated (and, some would say, worse), four states are actually planning to tighten Medicaid eligibility and kick current enrollees out of Medicaid. In Rhode Island, Vermont, and Wisconsin, everyone who is kicked out will be above the poverty line and, therefore, eligible for federally subsidized private insurance. But in Maine, approximately 10,000 adults without dependent children who are below the poverty line will be kicked out of Medicaid. In most states, these individuals wouldn’t have been eligible for Medicaid in the first place — until next year. In theory, these low-income Mainers will be no worse off next year than if they lived in one of the other 21 states that have rejected Medicaid expansion, except that losing insurance is, perhaps, psychologically more damaging than never having had it.
What do you think — can kicking poor, childless adults out of Medicaid be justified? What about refusing to expand Medicaid to include these individuals? Depending on what state you live in, do you personally know anyone who will either benefit from, or be left out of, next year’s Medicaid expansion? Do you know anyone with diabetes who relies on Medicaid for treatment, or who is poor but ineligible for Medicaid? Leave a comment below!
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